After the challenges posed by the coronavirus pandemic in the past year, the Lifestyle goods industry has come back to life, with improved demand trends for casual, comfortable and functional clothing, particularly workout-related apparel and accessories. Additionally, the surge in online demand, and quick adaptability by players to provide easy shopping and delivery options have played a key role in overcoming the headwinds witnessed in the initial stages of the pandemic.
Notably, the stocks of the lifestyle industry participants have rallied big time from the coronavirus outbreak-led lows, with many now trading higher than their pre-pandemic highs.
The stocks in the lifestyle space have displayed a great feat from the latter half of 2020, owing to the industry players’ efforts to enhance customers’ shopping experiences. The Zacks Textile-Apparel industry, which comprises lifestyle goods manufacturers like apparel and footwear, has witnessed a surge of 87.5% in the past year compared with growth of 51.1% and 52.5% recorded by the S&P 500 and the broader Consumer Discretionary sector, respectively. Further, the industry carries a Zacks Industry Rank of #50 (out of 254), placing it at the top 20% of the Zacks industries.
Here’s How Trends Have Evolved
The pandemic has led to the evolution of trends across many consumer-focused industries, the Lifestyle industry being no exception. Among evolved consumer trends, the desire to live an active and healthy lifestyle has gained prominence. This combined with growth in demand for technical athletic apparel for better performance has been overwhelming for companies like lululemon athletica inc. LULU and Under Armour, Inc. UAA, which are focused on activewear and other athletic goods.
Further, there has been a splurge in demand for casual clothing and footwear due to the stay-at-home and work-from-home practices. This has led to compelling growth in demand for on-the-move and casual products.
Another trend that has been a game-changer amid the pandemic is companies’ ability to adapt to the rise in online demand due to the closure of stores across the globe. Companies have been witnessing strong growth in e-commerce as consumers now prefer to shop from the safety of their homes. Lifestyle companies have particularly gained from the trend mainly due to its already in place e-commerce portals and omni-channel capabilities. These companies have gone a step forward to take advantage of the increased consumer preference by investing in the advancement of their e-commerce sites and apps, including the enhancement of merchandise offerings as well as better experience.
These efforts have rightly paid off, which is evident from robust growth in e-commerce sales almost throughout the pandemic, despite headwinds in off-line sales.
Additionally, lifestyle companies have worked to provide better deliveries and omni-channel facilities to boost customer experiences. Omni-channel capabilities, including contactless curbside pick-up, buy online pick-up from store and same-day delivery, have been aiding the omni-channel experience of customers amid the pandemic. Also, companies are investing in renovation and improved checkouts as well as mobile point-of-sale capabilities to make stores attractive, as the stores reopen.
The aforementioned factors and trends call for investing in the Lifestyle stocks that have the requisites for garnering further momentum in the days to come.
Here we have highlighted five Zacks Textile-Apparel stocks with a favorable combination of a Zacks Rank #1 (Strong Buy) or #2 (Buy) and a VGM Score of “A” or “B”. These stocks are backed by sound fundamentals, surging share price and a track record of better-than-expected results. Notably, each of these stocks has outperformed the S&P 500 composite’s growth of 10.6% on a year-to-date basis.
Per the Zacks’ proprietary methodology, stocks with such a perfect mix of elements offer solid investment opportunities.
GIII Apparel Group, LTD. GIII has been benefiting from the robust demand for casual, comfortable and functional clothing. In addition, its digital business continues to exhibit strength. We note that management is focused on growing the digital business, with expansion in the distribution channel. Management has also completed the restructuring of the retail division. Further, the company’s new retail model has been positioned on a path to profitability.
GIII Apparel has a VGM Score of B. The Zacks Consensus Estimate for GIII Apparel’s fiscal 2022 earnings stands at $2.33 per share, suggesting growth of 223.6% from the year-ago period’s reported figure. The company delivered an earnings surprise of 49.7%, on average, in the trailing four quarters. The stock of this Zacks Rank #1 company has risen 29.3% year to date. You can see the complete list of today’s Zacks #1 Rank stocks here.
Crocs, Inc. CROX is driven by healthy demand in its key products, including Clogs, Sandals, Jibbitz and Visible Comfort technology, which is aiding the top line. Going ahead, it remains on track with product launches and strategic partnerships, including global launches with Justin Bieber and Post Malone to a collaboration agreement with Rare Market in Korea. It is also making significant progress in expanding its digital and omni-channel capabilities.
Crocs currently has a Zacks Rank #2 and a VGM Score of A. The consensus mark for its 2021 earnings stands at $3.89 per share, indicating growth of 20.8% from the prior-year period’s reported figure. The company delivered an earnings surprise of 194%, on average, in the trailing four quarters. The stock has risen 26% year to date.
Ralph Lauren Corporation RL is focused more than ever on creating innovative digital experiences to connect with customers across the globe. It is making significant progress in expanding digital and omni-channel capabilities through investments in mobile, omni-channel and fulfillment. It is also on track to surpass its top and bottom-line targets under the “Next Great Chapter” plan, which was announced in June 2018.
Ralph Lauren presently has a Zacks Rank #2 and a VGM Score of B. The consensus mark for its fiscal 2021 earnings stands at 55 cents per share. The consensus mark has moved north by 4 cents in the past 30 days. The company has been delivering earnings surprise for the past two quarters, with a 3.09% beat reported in the last reported quarter. The stock has risen 20.1% year to date.
Under Armour is benefiting from brand strength, cost containment and better execution. It is progressing well with its multi-year transformation plan. Its efforts to build brand image, strengthen the supply chain, manage inventory and contain costs have been key drivers. The company’s long-term growth strategy is focused on improving sales through ongoing product innovation, investments in own stores and acceleration of e-commerce, and selling more inventory at full price.
Under Armour has a VGM Score of B and a Zacks Rank #2. The Zacks Consensus Estimate for Under Armour’s 2021 earnings stands at 19 cents per share, suggesting growth of 173% from the prior-year period’s reported figure. The company delivered an earnings surprise of 191.3%, on average, in the trailing four quarters. The stock has risen 29.8% year to date.
Kontoor Brands, Inc. KTB is evolving with a focus on stabilizing and optimizing its model through restructuring and quality of sales initiatives. The company’s strategies and investment are focused on enhancing and accelerating its core business through share gains and expanding the marketplace within U.S. wholesale. Additionally, it is focused on transforming its D2C and digital ecosystem in driving channel expansion and expanding geographically with a focus on China. Also, it expects to broaden its reach into new categories in usage occasions, emphasizing outdoor, t-shirts and workwear.
Kontoor Brands currently has a VGM Score of A and a Zacks Rank #2. The Zacks Consensus Estimate for the company’s 2021 earnings stands at $3.71 per share, suggesting growth of 42.2% from the prior-year period’s reported number. It delivered an earnings surprise of 47.5%, on average, in the trailing four quarters. The stock has risen 45.4% year to date.
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Ralph Lauren Corporation (RL) : Free Stock Analysis Report
lululemon athletica inc. (LULU) : Free Stock Analysis Report
Crocs, Inc. (CROX) : Free Stock Analysis Report
GIII Apparel Group, LTD. (GIII) : Free Stock Analysis Report
Under Armour, Inc. (UAA) : Free Stock Analysis Report
Kontoor Brands, Inc. (KTB) : Free Stock Analysis Report
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